When it comes down to Filing for Bankruptcy in Cairns, there are a ton of choices that we get given depending on who we are, who we approach, and just what has happened. Among the most common trouble I see with Filing for Bankruptcy is when it comes to selecting between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.
Should I consolidate my debts?
When it comes to Filing for Bankruptcy in Cairns, most of the information you receive on this issue will reflect the interests of the advice giver. That is why, if you call a debt consolidation company, I can guarantee you they will tell you to consolidate your debts. The debt consolidation business is a multi-billion dollar industry making money in one very simple way: charging you a fee for aiding you wrap each of your credit card and personal loans into one neat and tidy bundle.
I hate to tell you this but they aren’t going to be doing it for free. Please don’t misunderstand me: if you believe your financial troubles in Cairns may be solved by paying less interest, then go on and look into the options. Even a little amount of interest saved over years quickly adds up.
Generally I find if you are reading this blog you’ve probably attempted to consolidate your debts already and come to the following realisations similar to these:
- Your credit rating is no good, and your credit file definitely has nonpayments on it so not a single person will offer you a loan, consolidated or otherwise,.
- By the time you work all of it out, you’re so far down a hole that saving a little bit of interest just won’t make a lot of difference,.
- You’ve most probably gotten to the stage where you’ve had more than enough, you’re mentally drained, you can’t go on another day ignoring blocked calls on your phone, ignoring the demands in the mail and so on.
Personal Insolvency Agreements.
So when it relates to Filing for Bankruptcy in Cairns, what’s the big difference between a Debt Agreement and a Personal Insolvency Agreement?
Overall flexibility is the main thing Personal Insolvency Agreements (PIA) have in their favour. They’re also administered by a registered and – may I add – regulated trustee featuring the government trustee ITSA, and not a private organization that advertises on TV. Essentially this method resembles Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these guys arrange a deal on your behalf. You can give a lump sum settlement figure or enter into a payment plan, or you can offer them assets rather than cash. This might sound okay when it comes to the problems with Filing for Bankruptcy– that is up until you realise that one of the challenges with PIA’s is that 75 % of the people you owe money to will need to agree on the deal. If they don’t, your plan is rejected or needs to be renegotiated.
Generally people you owe money prefer all their money back in addition to interest. Sometimes they’ll go for less than the amount you owe them – it’s typically a percentage of the debt– but let me stress this part: because of all the variables involved in the negotiation process to put together a PIA its difficult to put a figure on what the people you owe money to will in fact settle for.
Most of the time you’ll have to pay back 100 % of the debt owed. This is not just because your creditors are greedy or have a mean streak, it’s because the administrators take 20 % of whatever is decideded upon with the people you owe money to. That applies whether you use a private company for this process or ITSA, the government body setup to administer to these PIAs.
When it comes to Filing for Bankruptcy and insolvency I’ve come across creditors opting for less 80 % on rare occasions, but that usually only occurs with a public company going into receivership owing huge sums of money (the kind that makes the news). If you are were owed $10million and you know the people who owe you the money have a team of smart lawyers and some very clever structures in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Cairns aren’t going to get that lucky!
If you want to find out more about what to do, where to turn and what questions to ask about Filing for Bankruptcy, then feel free to get in touch with Bankruptcy Experts Cairns on 1300 795 575, or visit our website: www.bankruptcyexpertsCairns.com.au.